Business, Legal & Accounting Glossary
A CD with a very large denomination, usually $1 million or more. These are usually bought by institutional investors who are interested in low-risk investments. Jumbo CDs are usually in bearer form, and have secondary markets that are highly liquid.
A jumbo CD, or certificate of deposit, is a CD having a minimum denomination of $100,000. Individuals and institutions alike can use the CD as a low-risk way to earn interest income. The depository institution may offer a better rate for the jumbo CD than it does for a standard CD for the same term, but the jumbo CD rate is still determined competitively by market forces. In every other respect, the jumbo CD is like a standard CD. Typical maturities for a jumbo CD are 1 to 6, 9, 12, 18, 24, 30, 36, 48, or 60 months. Early withdrawal of a jumbo CD can incur a significant penalty. Note that a jumbo CD deposited by one individual can be fully insured by the FDIC, but only for $100,000.
negotiable certificate of deposit
Jumbo CDs are large-denomination certificates of deposit with balances of $100,000 or more. They typically pay higher interest rates than smaller CDs and are primarily purchased by institutional investors. Individual investors, on the other hand, are increasingly being marketed to as low-risk, fixed-income assets. Negotiable or non-negotiable jumbo CDs Negotiable CDs are often issued in bearer form, which means that physical possession of the paper document is the only proof of ownership. Banks that sell bearer CDs do not keep track of who owns what. Non-negotiable Jumbo CDs, like conventional CDs, are held in the name of the purchaser and remain on deposit in the bank that issued them. These Jumbo CDs, like other bank deposits, are FDIC insured up to $100,000 per depositor in various categories of taxable accounts at each bank, and up to $250,000 if held in self-directed retirement accounts, such as individual retirement accounts (IRAs).
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This glossary post was last updated: 5th April, 2022 | 0 Views.